BPW Foundation's Women Misbehavin' Blog

Well behaved women never make history

Closing the Wealth Gap

Posted by egehl on April 15, 2010

This month women nationwide will recognize Equal Pay Day, an annual event that draws attention to the persisting wage gap between men and women’s earnings.  While the wage gap remains a significant financial issue in a woman’s life, it’s only a piece of the economic pie. 

Women experience more than just a wage gap, but also a wealth gap.  And this is especially prevalent among minority communities.  While women do continue to take home less pay, their earnings are only one part of their financial health.  What matters more than income over a lifetime is the accumulation of wealth.  The amount of income a woman earns is important for day to day survival, however only overall wealth can generate further income, support a family and leave inheritance, sustain a retirement and offer a cushion in case of unemployment.

Unfortunately this is even more pronounced for many women of color as they face not only a larger wage gap, but also a wealth gap.  Women of color are less likely to own a home, stocks or other investments that can generate money and provide financial stability.  Instead many women depend on their car as their only asset.

New research from the Insight Center for Community Economic Development reveals disturbing data about a widening wealth gap nationally, particularly for women of color.  More attention needs to be paid to the enormous disparity in wealth that undermines the economic security of African-American and Latina women.

With the increasing costs of everyday life it’s not surprising that women are having a harder time building their wealth and assets.  With higher education costs and rising school debt, family financial insecurity, expensive health care, job opportunities with salaries not commiserate with today’s cost of living, and an increased use of credit cards to fund essentials like groceries and gas, wealth accumulation is nearly impossible.  I think everyone can relate to the feeling when you finally get ahead with bills and pay down debt, an unexpected life expense knocks you back down. 

The wealth gap begins early especially for minority women growing up in poorer households.  Half of all young women, regardless of race are beginning their adult years with debts greater than the value of their assets.   In comparison, young men of all races tend to begin with a positive net worth, and maintain higher levels of wealth throughout their lifetimes.

Challenges facing minority women to close the wealth gap include home ownership, parenting challenges and the inability to save for retirement.  African American and Latina women lag behind their counterparts in home ownership, and are more likely to be pushed into a sub-prime mortgage.  The parenthood years are also fraught with challenge as women of color are more likely to be supporting multiple children, as well as extended family, on weaker salaries.  Finally according to the Center for Community Economic Development report, women of color ages 65 and older are least likely to receive retirement income from pensions or from assets.

So what are solutions to close the wealth gap?  First, stronger benefits should be offered because they often bypass minority women.  For example, when a woman has better benefits such as paid sick days, access to a 401k account, pensions and stronger health insurance this helps alleviate out-of-pocket costs that women with low-income hourly jobs often have to pay. 

Better benefits not only help women save, but also gives them a cushion for unexpected life occurrences that can wipe out their finances.  Other solutions include better job training programs, increasing the minimum wage, supporting early childhood programs, expanding child care assistance, encouraging smart home ownership through tax incentives and first time home buyer education, addressing the wage gap, protecting Social Security, and providing more benefits for self-employed and part-time workers.  These proactive measures would require policy changes that could address some of the wealth inequality facing women. 

Finally there should be more educational opportunities to teach women about how to invest, save and make smart financial decisions.  The program should also be designed with a cash-strapped individual in mind and include a lot of the basics.

Today more than ever, after the economic crisis we’ve just endured, building wealth is hard.  High unemployment rates remain, prices continue to rise, loans are harder to secure and owning a home seems more out of reach.  However through better financial education, smart policy changes and women supporting each other wealth creation is possible.

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